Correlation Between Jiangsu Jinling and Strait Innovation

Can any of the company-specific risk be diversified away by investing in both Jiangsu Jinling and Strait Innovation at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jiangsu Jinling and Strait Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jiangsu Jinling Sports and Strait Innovation Internet, you can compare the effects of market volatilities on Jiangsu Jinling and Strait Innovation and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jiangsu Jinling with a short position of Strait Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangsu Jinling and Strait Innovation.

Diversification Opportunities for Jiangsu Jinling and Strait Innovation

0.88

Correlation Coefficient

Jiangsu Jinling  Strait Innovation

Very poor diversification

The 3 months correlation between Jiangsu and Strait is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Jiangsu Jinling Sports and Strait Innovation Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strait Innovation and Jiangsu Jinling is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jiangsu Jinling Sports are associated (or correlated) with Strait Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strait Innovation has no effect on the direction of Jiangsu Jinling i.e., Jiangsu Jinling and Strait Innovation go up and down completely randomly.

Pair Corralation between Jiangsu Jinling and Strait Innovation

Assuming the 90 days trading horizon Jiangsu Jinling Sports is expected to generate 0.9 times more return on investment than Strait Innovation. However, Jiangsu Jinling Sports is 1.11 times less risky than Strait Innovation. It trades about 0.04 of its potential returns per unit of risk. Strait Innovation Internet is currently generating about 0.02 per unit of risk. If you would invest  1,321  in Jiangsu Jinling Sports on December 26, 2024 and sell it today you would earn a total of  50.00  from holding Jiangsu Jinling Sports or generate 3.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Jiangsu Jinling Sports  vs.  Strait Innovation Internet

Jiangsu Jinling Sports

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jiangsu Jinling Sports are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Jiangsu Jinling is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Strait Innovation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strait Innovation Internet are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Strait Innovation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Jiangsu Jinling and Strait Innovation

The main advantage of trading using opposite Jiangsu Jinling and Strait Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangsu Jinling position performs unexpectedly, Strait Innovation can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Strait Innovation will offset losses from the drop in Strait Innovation's long position.

The idea behind Jiangsu Jinling Sports and Strait Innovation Internet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bonds Directory module to find actively traded corporate debentures issued by US companies.